Unemployment Rises for Right Reasons in June Jobs Report –
By Andrew Soergel (usnews.com) / July 6 2018
The unemployment rate ticked up last month, but many analysts welcomed the increase.
Solid job creation from the manufacturing sector last month bolstered U.S. employment growth.Bill Pugliano/Getty Images
Many analysts are viewing a slight uptick in the U.S. unemployment rate last month as a positive sign for the domestic economy – suggesting more unemployed folks are coming off the sidelines and trying to land jobs.
After holding steady or falling for nine consecutive months, the unemployment rate ticked up to 4 percent last month, according to a jobs report published Friday by the Bureau of Labor Statistics. In May, U.S. unemployment dropped to 3.8 percent – rarefied labor market territory that hasn’t been bested since the late 1960s.
At the same time, however, labor force participation rose 0.2 percentage points – indicative of more workers getting jobs or actively looking for work. Because of the way in which the government goes about calculating unemployment, those who aren’t actively looking for a job – either because of retirement, higher education pursuits or simply because they’ve given up on trying to find a position – don’t factor into standard unemployment percentages.
So a slight increase in unemployment, coupled with the labor force rising by more than 600,000 people and participation inching up to 62.9 percent, is being viewed as a positive step forward.
Employers, meanwhile, drummed up 213,000 new positions last month, which represents a slight downtick from May’s 244,000 additions but is still considered to be impressive this late into what is now the second-longest economic recovery on record. Retail woes resurfaced last month, with payrolls dropping by nearly 22,000 workers. But the sector’s struggles were offset by strong performances from professional and business services, health care and social assistance, and manufacturing employers.
And average hourly earnings ticked up 2.7 percent from where they sat a year ago – a respectable pace but still slightly shy of the robust pay gains economists have predicted in light of the country’s general shortage of available skilled workers.
Here’s what some of the nation’s leading economists are saying about the June jobs report.
Gus Faucher, senior vice president and chief economist at The PNC Financial Services Group
“The unemployment rose to 4.0 percent in June from 3.8 percent in May, but for a good reason. More than 600,000 people entered the labor force in June to look for work, encouraged by the strong labor market,” he said. “The U.S. labor market is in excellent shape in mid-2018. Job growth is well above what is needed to keep up with new labor force entrants, and strong demand for workers and limited supply will continue to put upward pressure on wages.”
Martha Gimbel, director of economic research at Indeed
“While tariffs may slow down job growth moving forward, there is no sign yet in the June jobs report. With payroll job growth coming in at 213,000 (about typical for this recovery), this recovery continues on its record-breaking pace,” she said. “We just hit 93 straight months of job growth – a new historical record. Notably, manufacturing job growth was strong in June, growing 3.5 percent at an annualized rate compared to its rate over the last year of 2.3 percent.”
Jim Baird, partner and chief investment officer at Plante Moran Financial Advisors
“If you’re looking for a good story in the June job report, you can certainly find it. If you’re looking for bad news, you’re probably able to find that as well,” he said. “There’s something for everyone to point to in support [of] either a glass half full or empty view; it really depends on how you choose to look at the glass.”
Eric Winograd, senior vice president and senior economist at AllianceBernstein
“The top level takeaway is that the labor market remains consistent with robust economic growth but not yet tight enough to generate the kind of upward inflation pressures that would encourage the [Federal Reserve] to raise rates more rapidly,” he said. “Firms continue to hire workers but have not yet had to boost compensation per worker as much as would have been expected. While that is bad news for each worker, it does serve to limit the extent to which labor market tightness passes through to higher prices, which will allow the Fed to continue on its gradual path toward higher rates.”
Tendayi Kapfidze, chief economist at LendingTree
“More construction is on the way. Construction jobs rose 13,000 in June,” he said. “Over the past year, 282,000 total construction jobs have been added as builders work to add supply given the tight inventory and rising home prices.”
Mark Hamrick, senior economic analyst and Washington bureau chief at Bankrate.com
“Let’s remember that for some time, the unemployment rate has been below the level typically associated with ‘full employment,’ but the relatively robust level of hiring being seen suggests there’s more room to the downside for the jobless rate,” he said. “For the Federal Reserve, this helps the central bank to avoid having a sense of alarm on the inflation issue. So, the Fed remains on track to boost rates 1 or 2 times between now and the end of the year.”
